The FS sector is making good progress on diversity and inclusion but more needs to be done. That is the collective view of the FCA, the PRA and Bank of England as they publish their discussion paper ‘Diversity and inclusion in the financial sector – working together to drive change’ which was published last week.
They say serious inequalities and lack of inclusion between different groups are present in society that they want to play a part in addressing the negative impact this has within financial services. They want firms to do more, more quickly, to improve diversity and inclusion within their own workforces. They point to the research which shows a strong correlation between diversity and inclusion and positive outcomes in risk management, good conduct, healthy working cultures and innovation.
The paper is wide ranging and the regulatory focus on D&I goes wider than the Equality Act’s protected characteristics. So, there several references to socio-economic diversity with concern that those in senior roles are from higher socio-economic backgrounds. That is an important issue to address and one that we have been helping clients in this sector to address so let’s hear more about it. Laura Starrett is based in Manchester, and she joined me by phone to discuss the paper and the work she has been doing with clients. I started by asking what she makes of the paper:
Laura Starrett: “The findings of the paper are significant because it acknowledges that more needs to be done to drive social mobility within senior roles in the financial services sector and that means looking beyond the protected characteristics outlined in the Equality Act to take into account other factors, including socio economic diversity. It’s clear that in order to tackle this issue of social mobility the starting point will be an effective data gathering exercise that is going to need to include different categories of information, such as what type of secondary school the individual attended, the type of university, the type of job occupied by parents and whether they attend to university, eligibility for free school meals, and so forth. These categories of data are important because they help measure economic disadvantage which can then play a part in individuals securing senior roles. The other issue here is from a data point of view. There is a pressing need to track individual data of those who secure junior positions within the business, and then their route of progression to senior roles, in order to help identify key hurdles. When we're talking about tracking this type of data, obviously, that's going to raise questions from a GDPR perspective, as the business will be dealing with sensitive information that equates to a special category data and I think by communicating the rationale for this to the wider workforce, so in other words, creating more socio economic diversity within senior leadership, individuals will be more likely to provide their consent because there's more of an understanding around the bigger picture in terms of the why around collecting the data in the first place. Once the business has the data, it is then fully informed of its current position and that allows us to, effectively, develop a strategy to tackle the issue and set some clear targets and it’s that transparency and accountability within the business which can then be shared more widely, and also taken into account by the social mobility employer index which ranks employers on the actions that they are taking to improve this issue.”
Joe Glavina: “So what has Pinsent Masons, as a firm, been doing in this space, Laura?”
Laura Starrett: “So we recently launched our social mobility champions network at the start of this year, which any member of the firm can join who has an interest in championing social mobility issues internally within our business, perhaps by sharing their own personal journey, or acting as a mentor, but also externally in representing our business through our school partnerships programme, which is where our people can work with schools in deprived areas to act in a mentor capacity. The other recent concept that we've launched is our Spark Board and that is which is effectively a junior board that feeds into the main board in order to encourage diversity of thought. So, these are the types of initiatives that we've been thinking about at Pinsents to help play our part in attacking social mobility.”
Joe Glavina: “So what are clients doing to address this issue, Laura.”
Laura Starrett: “I think clients are at a very early stage and on the social mobility front. I think the first starting point is thinking about the data gathering exercise and really applying their minds to what types of categories of data do they need to think about collating? So, a lot of it will be around those categories that I've mentioned in terms of type of secondary school, university attended, jobs occupied by parents, so that they can really understand at the outset what the position is of the business, and then they can obviously take that data and come up with a strategy that addresses the social mobility issues within their organisation.”
Joe Glavina: “So is that about conducting staff surveys?”
Laura Starrett: “I think it's about extending their diversity questionnaires right at the outset of an individual's employment so that you have that data at the recruitment level but then you're also tracking that data when you have individuals who have joined the business from a lower socio economic background, tracking what their progression is within the organisation, and perhaps identifying any hurdles a key junctures when it comes to promotion programmes.”
Joe Glavina: “Final question Laura. What has been the attitude of staff when it comes to giving this sort of personal information about themselves? Cooperation or resistance?”
Laura Starrett: “I think in terms of the discussions that we have been having recently, it has been very positive because organisations are reflecting on the positioning of their leadership and, ultimately, there is a big drive towards diversity of thought within businesses because that is what generates truly creative and collaborative work and, ultimately, that is what's going to help to drive the business forward, whatever market they're operating in, and ultimately feed into its financial success.”
That discussion paper is called ‘Diversity and inclusion in the financial sector – working together to drive change’. If you’d like to download it for yourselves, you can – we have put a link to it in the transcript of this programme.
- Link to discussion paper: ‘Diversity and inclusion in the financial sector – working together to drive change’.